to download Telecom Italia Annual Report 2011 - Company Reporting

Plant and equipment includes all those structures used for the functioning of voice and data telephone
traffic. They refer to the entire company infrastructure and are divided into macro categories comprising
switching, power supply systems, access and carrier networks in copper and fiber, fixed-line and mobile
transmission equipment, base transceiver stations and also telephone systems for termination used by
the different clientele segments. Plant and machinery decreased 345,181 thousand euros owing
principally to the depreciation charge which was higher than additions during the year.
Manufacturing and distribution equipment consists of instruments and equipment used for the running
and maintenance of plant and equipment; the amount is more or less unchanged compared to
December 31, 2010.
Other is mostly made up of hardware for the functioning of the Data Centers and for work stations,
furniture and fixtures and, to a minimal extent, transport vehicles and office machines.
Construction in progress and advance payments refer to the internal and external costs incurred for the
acquisition and internal production of tangible assets, which are not yet in use. The balance decreased
by 124,835 thousand euros owing to a higher amount of assets which came into use during the year as
compared to new investments during the year. Moreover, impairment losses were recorded for
3,650 thousand euros to adjust to estimated realizable value both network materials no longer usable
and telephone systems in the process of being replaced with new technologically advanced materials.
Additions in 2011, include 246,525 thousand euros of internally generated assets (232,865 thousand
euros in 2010, with an increase of 13,660 thousand euros), basically the same as in 2010 (1,728,601
thousand euros).
The depreciation of owned tangible assets in 2011 is 182,840 thousand euros lower than in 2010. The
reduction is due to a lower amount of depreciable assets which is partly due to a drop in investments
over the last few years and partly to the full depreciation of assets purchased during the heavy
investment years of the ‘90s. The assets most involved are the underground network (-107,000
thousand euros), switching (-27,000 thousand euros) and assets for rent (-48,000 thousand euros).
Depreciation is calculated using the straight-line method over the remaining useful lives of the assets in
accordance with the depreciation plan approved in 2006 and confirmed/modified annually in applying
the useful lives by single class of fixed asset. The effects of any changes in the useful life are recognized
in the separate income statement prospectively.
Depreciation for the years 2011 and 2010 is calculated on a straight-line basis over the estimated
useful lives of the assets according to the following minimum and maximum rates:
Buildings (civil and industrial) 3.33%
Plant and equipment 3% - 50%
Manufacturing and distribution equipment 20%
Other 11% - 33%
Gross carrying amount, accumulated impairment losses and accumulated depreciation at
December 31, 2011 and 2010 can be summarized as follows:
12/31/2011
(thousands of euros)
Gross carrying
amount
Accumulated
impairment
losses
Accumulated
depreciation
Net carrying
amount
Land 119,791 (528) - 119,263
Buildings (civil and industrial) 1,275,401 (1,296) (890,266) 383,839
Plant and equipment 55,979,421 (4,930) (47,531,724) 8,442,767
Manufacturing and distribution equipment 187,977 - (162,283) 25,694
Other 2,407,243 (2,184) (2,106,502) 298,557
Construction in progress and advance payments 456,898 (864) - 456,034
Total 60,426,731 (9,802) (50,690,775) 9,726,154
Telecom Italia S.p.A. Separate Financial Statements
Note 5 – Tangible assets (owned and under finance leases) 332